Artha India Ventures is looking to float its own fund and make the most of a year where early-stage investing has seen its size shrink significantly.
The family office of former BSE director Ashok Damani is in the final stages of making a formal application to market regulator Sebi to register Artha Venture Fund.
The fund will invest in startups across seed, pre-series A and series-A levels of growth.
Artha Venture Fund, which will be registered as a Category I Alternate Investment Fund post the regulator’s approval, will carry a size of Rs 200 crore with a greenshoe option of Rs 100 crore.
“We have received commitments from a bunch of Indian high networth individuals to make the first Rs 40 crore,” Anirudh Damani, close at director at Artha India Ventures, told ET. Damani expects to make the first close a month after the regulator grants its approval.
Artha India Ventures is the latest in a host of early-stage angel networks and family offices that have taken the mantle of bridging the gap in early-stage funds at a time when angel and seed investments have seen a significant dip, both in volume and deal value terms.
ET had reported in April that angel network platform Indian Angel Network (IAN) had floated its maiden fund with a corpus of Rs 350 crore and made the first close at Rs 175 crore. Seed investment platform Venture Catalysts too began expanding globally last month to strengthen its global investor muscle and widen the pool of capital available for the early-stage pipeline, ET reported last month.
With a fund life of seven years and the option to extend it by two years, Artha Venture Fund will look at ticket sizes that range from Rs 1 crore to Rs 7 crore across startups.
“The total commitment for a company over three rounds will be between Rs 10 crore and Rs 12 crore,” said Damani. Through the fund, Damani is looking to lead and participate in about 10-12 deals each year. “Our commitment to investors is to show them an internal rate of return (IRR) of 30-40%.”
As a family office, Artha India Ventures follows a self-sustaining method for funding startups. The cash flow generated from its clean energy asset in Rajasthan is used to fund startups’ growth. The cash flow generated tops Rs 90 lakh per year and hence limits the group’s ability to write bigger cheques, which they aim to do through the new fund.
The fund will be promoted by Artha India Ventures and Singularity Holdings whose investment arm has invested in lingerie brand Clovia and fashion ecommerce portal StalkBuyLove.
While most of the investor commitments have come from HNIs so far, the fund will look to raise the remaining amount from larger limited partners and family offices.
“If LPs and family offices participate, we might raise the target of the first close. We don’t want to have multiple HNIs because they may not be able to help companies reach series A rounds eventually,” said Damani.